[Federal Register Volume 59, Number 221 (Thursday, November 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-28324]


[[Page Unknown]]

[Federal Register: November 17, 1994]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Social Security Administration

20 CFR Part 416

RIN 0960-AC86

 

Supplemental Security Income for the Aged, Blind, and Disabled; 
Treatment of Augmented Veterans Benefits, Anderson, et al. v. Sullivan

AGENCY: Social Security Administration, HHS.

ACTION: Final rules.

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SUMMARY: These final regulations set out our policy, under the 
supplemental security income (SSI) program, regarding the treatment of 
veterans benefits that are increased (``augmented'') to provide for 
dependents. The effect of these regulations is to clarify our treatment 
of the ``dependent's portion'' of the veterans benefits.

DATES: Effective Date: November 17, 1994.
    Applicability Dates: The application dates of these final 
regulations are discussed in the SUPPLEMENTARY INFORMATION.

FOR FURTHER INFORMATION CONTACT: Regarding this document--Duane Heaton, 
Legal Assistant, 3-B-1 Operations Building, 6401 Security Boulevard, 
Baltimore, MD 21235, (410) 965-8470; regarding eligibility or filing 
for benefits--our national toll-free number, 1-800-772-1213.

SUPPLEMENTARY INFORMATION: Section 1612 of the Social Security Act (the 
Act) specifies certain items that are included as earned and unearned 
income under the SSI program. Section 1612(a)(2)(B) provides that 
unearned income includes, among other things, payments received as an 
annuity, pension, retirement, or disability benefit, including veterans 
compensation and pensions.
    With regard to veterans benefits, in certain situations the veteran 
or the veteran's surviving spouse's benefits are augmented on account 
of the dependents of the veteran. Prior to November 1981, the Social 
Security Administration (SSA) counted the entire benefit, including the 
augmented portion, as income to the veteran or veteran's surviving 
spouse for SSI purposes. In 1981, after the policy was successfully 
challenged in the courts, SSA changed its policy, effective November 1, 
1981, and published a ruling (SSR 82-31) which explained that for SSI 
purposes the dependent's portion of an augmented veterans benefit would 
not be counted as unearned income to the veteran or the veteran's 
surviving spouse but as unearned income to the dependent.

The Anderson Case

    SSA was challenged in Anderson, et al. v. Sullivan, No. CV-88-036-
GF (D. Mont., Nov. 21, 1989), for not applying the policy published in 
SSR 82-31 to a nationwide class of recipients of veterans pensions 
known as ``protected pensions.'' The protected pensions under Pub. L. 
95-588 include pensions which are means-tested and paid under 
provisions that predate the current ``improved pension'' program. In 
Anderson, the plaintiff was a veteran's widow who received a veterans 
protected pension and SSI disability benefits. Her pension was 
augmented due to the presence of a dependent in her household. SSA 
considered the full amount of the veterans pension, including the 
dependent's portion, as income to Mrs. Anderson in determining the 
amount of her SSI benefits. She filed suit against the Secretary of 
Health and Human Services (the Secretary) seeking relief from our 
practice of counting the dependent's portion of her veterans protected 
pension as income to her. SSA had counted this as income to her because 
of incomplete information received from the computer match between the 
Department of Veterans Affairs (VA) and SSA with regard to veterans 
protected pensions. On November 21, 1989, the court in Anderson ordered 
the Secretary to promulgate, within 6 months, interim final regulations 
that provide that the augmented portion of a veterans pension is not to 
be counted as unearned income to the veteran or the veteran's surviving 
spouse.

Provisions of the Regulations Under Anderson

    Interim final regulations implementing the Anderson order were 
published on May 18, 1990 (55 FR 20598). Consistent with that order, we 
revised section 416.1123 of our regulations, which sets out how we 
count unearned income. We added a new paragraph (e) to explain that if 
you receive a veterans benefit that includes an amount paid to you 
because of a dependent, we do not count as your unearned income the 
amount paid to you because of the dependent.

The Paxton Case

    The treatment of the dependent's portion of an augmented benefit 
was also challenged in Paxton v. Secretary of Health and Human 
Services, 856 F.2d 1352 (9th Cir. 1988). In Paxton, the plaintiff was 
an SSI recipient. Mr. Paxton, the plaintiff's husband, received a 
pension from the VA. In determining the amount of Mrs. Paxton's SSI 
benefit in accordance with SSR 82-31, SSA reduced her SSI benefit by 
the amount of the dependent's portion attributable to her from her 
husband's veterans pension. Mrs. Paxton filed suit against the 
Secretary seeking relief from the practice of counting as her unearned 
income that portion of her husband's veterans pension that was 
attributed to her.
    The court in Paxton held that, as written, the current regulations 
did not support counting the dependent's portion of the veterans 
pension directly as unearned income to the dependent. On the same date 
that we published the interim final regulations pursuant to the 
Anderson court order, we also published an NPRM at 55 FR 20612 to 
clarify our policy on the treatment of augmented benefits to prevent 
future misinterpretation of the regulations, as occurred in Paxton. 
Further, we published Acquiescence Ruling AR 90-1(9) on July 16, 1990 
(55 FR 28946) to reflect the decision of the Ninth Circuit in Paxton. 
Under AR 90-1(9), we do not count the dependent's portion of the 
veterans benefit as unearned income to the dependent in the Ninth 
Circuit. Upon the effective date of these regulations, we will rescind 
AR 90-1(9) and supersede SSR 82-31 with a ruling that contains only the 
policy of the obsoleted SSR 82-31 that is not the subject of these 
regulations.

Implementing These Regulations in the Ninth Circuit

    Some recipients in the Ninth Circuit may lose SSI benefits as a 
result of the rescission of AR 90-1(9). To lessen the effect of the 
rescission on those recipients, we will apply these regulations to them 
only prospectively upon routine redetermination of eligibility. While 
we realize that, due to variances in the dates of redetermination, some 
of these individuals will benefit more from this treatment than others, 
none of these individuals will lose any more SSI benefits than if these 
regulations were applicable to them on publication, rather than on 
redetermination, and most will lose less. Moreover, since the 
publication date will not be used as the effective date of these 
regulations for these individuals, our implementation will avoid the 
negative consequences of overpayment determinations. This method of 
implementation was not contained in the NPRM. However, AR 90-1(9) was 
published subsequent to the publication of the NPRM, and accordingly, 
the NPRM did not contemplate the effect of the AR's rescission upon 
some recipients to whom the AR applied. In order to fully apprise the 
affected claimants of the impact of these new rules, we decided that 
the publication of our plan for implementing the regulations 
prospectively at redetermination for those to whom AR 90-1(9) had been 
applied should be part of the final rules.

Public Comment

    Both the interim final rule and the NPRM which were published on 
May 18, 1990, provided for a 60-day comment period. We received one 
comment in response to the NPRM and it was relevant to both the interim 
final rule and the NPRM. This comment was from an assistant director 
for a State agency that serves individuals with mental retardation and 
developmental disabilities. The comment generally supported the 
regulations, but recommended further changes. We have summarized and 
responded to the comment below.
    Comment: The commenter believes the proposed regulations may be 
inequitable to those dependents who neither receive nor materially 
benefit from their portion of the augmented veterans benefit. The 
commenter cited case experience of dependents living apart from the 
veteran who did not receive any benefit from their dependent's portion 
of the augmented veterans benefit. He proposes that the regulations 
also provide that the dependent's portion will not be counted as the 
dependent's income when it can be documented that such portion has not 
been made available to the dependent or that the dependent has not 
received in-kind income equal in value to the dependent's portion.
    Response: We agree it may not be appropriate to count the 
dependent's portion of the augmented veterans benefit payment as income 
to the dependent in those cases where the dependent lives apart from 
the veteran or the veteran's surviving spouse and does not receive the 
benefit of his or her portion. If all or part of the dependent's 
portion is not available for the benefit of the dependent, but is 
counted as the dependent's unearned income for SSI purposes, he or she 
may experience hardship and the inability to meet daily needs. Such a 
result could be viewed as inconsistent with the purpose of the SSI 
program which is to provide for the beneficiary's current needs when 
his or her income and resources are below specified amounts.
    However, where the dependent lives with the veteran or the 
veteran's surviving spouse and the dependent's augmented portion of the 
veterans benefit is included in the veteran's or the veteran's 
surviving spouse's check, we believe that it is reasonable to assume 
that the dependent benefits from his or her portion in this living 
arrangement by the dependent having and using, for example, heat, 
electricity, food, and space. Not only is it likely that the dependent 
would be advantaged in some way from living with the veteran or the 
veteran's surviving spouse, but it would be administratively onerous to 
monitor the exact percentage of food, electricity, and heat used by the 
dependent and the designated beneficiary of the veterans benefit in 
order to document to what extent the augmented portion is used on the 
support and maintenance of the dependent. In those cases in which the 
veteran or the veteran's surviving spouse provides cash or in-kind 
support to a dependent who does not reside with him or her, we will 
count such support under other SSI income rules appropriate to the 
nature of the support. We believe that this interpretation is 
consistent with the statutory requirements of the SSI program.
    Therefore, we are responding to this comment by revising 
Sec. 416.1123(e)(2) to provide that the dependent's portion will be 
counted as the dependent's unearned cash income if the dependent 
resides with the veteran or the veteran's surviving spouse, or if the 
dependent receives his or her own portion in a separate payment from 
the VA.
    The United States Courts of Appeals for the Second, Fourth, 
Seventh, and Tenth Circuits have held that it is reasonable to count 
the augmented portion of VA benefits as unearned income of the 
dependent on whose behalf it is paid, in White v. Shalala, 7 F.3d 296 
(2nd Cir. 1993), Kennedy v. Shalala, 995 F.2d 28 (4th Cir. 1993), Inman 
v. Shalala, Nos. 93-2305 and 93-2941 (7th Cir., July 19, 1994), and 
Ryder v. Shalala, 25 F.3d 944 (10th Cir. 1994).
    We are aware that the United States District Court for the Middle 
District of Florida has rejected this reasoning in Fair v. Shalala, No. 
90-1263-CIV-T-22A (M.D. Fla., Aug. 2, 1993). We have sought appellate 
review in this case, but will apply the operative court order pending 
the resolution of the appeal.
    Except for the changes noted above and several nonsubstantive 
technical revisions, we are adopting the rules as proposed on May 18, 
1990, at 55 FR 20612 and are restating the interim final rule published 
on that same date at 55 FR 20598.

Regulatory Procedures

Executive Order 12866

    We have consulted with the Office of Management and Budget (OMB) 
and determined that these rules do not meet the criteria for a 
significant regulatory action under E.O. 12866. Thus, they were not 
subject to OMB review.

Paperwork Reduction Act

    These final regulations impose no reporting/recordkeeping 
requirements requiring OMB clearance.

Regulatory Flexibility Act

    We certify that these final regulations will not have a significant 
economic impact on a substantial number of small entities because these 
regulations will affect only individuals. Therefore, a regulatory 
flexibility analysis as provided in Pub. L. 96-354, the Regulatory 
Flexibility Act of 1980, is not required.

(Catalog of Federal Domestic Assistance: Program No. 93.807--
Supplemental Security Income.)

List of Subjects in 20 CFR Part 416

    Administrative practice and procedure; Aged; Blind; Disability 
benefits; Public assistance programs; Reporting and recordkeeping 
requirements; Supplemental Security Income (SSI).

    Dated: September 22, 1994.
Shirley Chater,
Commissioner of Social Security.

    Approved: November 8, 1994.
Donna E. Shalala,
Secretary of Health and Human Services.

    For the reasons set out in the preamble, Part 416 of Chapter III of 
Title 20, Code of Federal Regulations, is amended as follows:

PART 416--[AMENDED]

    1. The authority citation for Subpart K of Part 416 continues to 
read as follows:

    Authority: Secs. 1102, 1602, 1611, 1612, 1613, 1614(f), 1621, 
and 1631 of the Social Security Act; 42 U.S.C. 1302, 1381a, 1382, 
1382a, 1382b, 1382c(f), 1382j, and 1383; sec. 211 of Pub. L. 93-66, 
87 Stat. 154.

    2. Section 416.1123(e) is revised to read as follows:


Sec. 416.1123  How we count unearned income.

* * * * *
    (e) Certain veterans benefits.
    (1) If you receive a veterans benefit that includes an amount paid 
to you because of a dependent, we do not count as your unearned income 
the amount paid to you because of the dependent.
    (2) If you are a dependent of an individual who receives a veterans 
benefit and a portion of the benefit is attributable to you as a 
dependent, we count the amount attributable to you as your unearned 
cash income if--
    (i) You reside with the individual who receives the veterans 
benefit, or
    (ii) You receive your own separate payment from the Department of 
Veterans Affairs.

[FR Doc. 94-28324 Filed 11-16-94; 8:45 am]
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